Type 2 diabetes mellitus (T2DM), Non Alcoholic Fatty Liver Disease (NAFLD), and their associated co- morbidities, are emerging as the most important health care problems in the USA. Recent studies by our group have established a key role for NAFLD in the pathogenesis of hepatic insulin resistance and T2DM in both adults and children. Complementary studies in transgenic and gene knockout mice by our group have elucidated the molecular mechanism for hepatic insulin resistance associated with NAFLD. In this R-24 grant a team of interdisciplinary and independent investigators, who have an established track record of collaboration, will address fundamental questions regarding the relationship between these two increasingly prevalent conditions. Specifically, this team of interdisciplinary scientists will examine the complex and related problems of who develops NAFLD, how does NAFLD cause hepatic insulin resistance, what triggers the increased hepatic gluconeogenesis in T2DM, and how do many of these changes rapidly resolve following Roux-en-Y gastric bypass (RYGB), even before substantial weight loss? Specifically we will examine: 1) The molecular mechanisms of hepatic insulin resistance and increased hepatic gluconeogenesis associated with NAFLD and T2DM. 2) The role of specific gene variants in apolipoprotein C3 in the pathogenesis of NAFLD and hepatic insulin resistance. 3) The cellular and molecular mechanisms responsible for the reversal of insulin resistance and T2DM following Roux-en-Y gastric bypass. This proposal builds on an established track record of interdisciplinary collaboration among the investigators as well as a 25-year history of developing and implementing novel state-of-the-art MRS/MRI and stable isotope methodologies for noninvasively assessing hepatic glucose and lipid metabolism in humans. It is anticipated that the results from the proposed studies will shift the current paradigm in our understanding of the pathogenesis of NAFLD, hepatic insulin resistance and T2DM.